Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 8
Lenny,
These stocks we will be investing in are going to be micro and small cap stocks and will probably be very volatile. So the drop could be substantial from day to day. So instead of saying a drop of 4 to 10 dollars we should talk in percentages. I would suspect a drop of 15% in a day would not be a big drop in these stock, in this market. Also since Ron said that we will be buying in thirds we can expect him to tell us when to buy another tranche.
My personal way of investing, and this is something I have learned from reading, listening to other investors on the MDP boards, and the school of hard knocks is this. If it is a large cap stock, I will buy my first third. If it drops 15% I will buy my next third, if it drops another 15% I will buy my last third. But this is like Rsue and oioboy said, it all depends on how the company is doing. There are times companies drop just because other companies in their sector drop, or because of a hiccup in their earnings. Now if it is a small cap company I will buy my first tranche and if it drops 30% I will buy my second and if it drops another 20% I might buy my last third. Again this is only if I believe the company is viable. These losses can really mess with your head but you have to believe in the companies you are investing in. If you dont, and they are dropping, you shouldnt just buy any more of it because they are dropping. You could be wrong.
Now, In Deep Value this is how I am going to invest. Now remember, we are going to buy 10 to 12 stocks. This will make our portfolio possibly very volatile, and if you cant handle volatility you might not want to be here. You will hear people complaining about losses on certain stocks, but hopefully we will not have to many losses. But with 10 to 12 stocks, 10% of our portfolio will be in one company and if it is a dog we could lose a tenth of our portfolio. So, Back to how I am going to follow Deep Value.
If Ron and Rich put out a buy on a stock I am going to look at the company. I want to make sure I am comfortable with it. I probably will not buy it for at least 2 days and it might be a week before I feel comfortable with it. During this time I will be reading up on the company and trying to understand it. There isnt any rush to buy, these stocks might get cheaper so there isnt any need to barn storm the door to get in. After I look at the company I will put in a limit order at the price I want. This will be my first third. Then I will wait for Ron or Rich to tell me when to buy my next third. I am not going overweight on these stocks until I am really comfortable with the companies and get a chance to understand them. I am going to let the MDPDV team to do all the heavy lifting and let them tell me what percentage to buy and when. This is what is going to be great about this portfolio, we have advisors helping us every step, and every day. Use them to make your decisions, that is what you are paying them for.
Lenny one thing I will tell you about buying a stock on the way down. Be very careful with your money. You can end up very overweight on your stocks if you do not have a very well thought out strategy. You do not want to be overweight in a stock that is a dog. These will cause you losses sometimes of great magnitude. So think out what you are doing now before you start investing and keep your strategy, even in the heat of the market losses. Not every company is a sure thing and even a sure thing can go south in a hurry.
One more thing, read, read, read. Read as many books by the great investors. Because by reading their thoughts it will make you a better investor. You can read posts from people on these boards and glean pearls of wisdom but think everything through before investing anything in any company.
I have a three year subscription. At the end of my subscription I will evaluate this service and see if it was worth it. I believe three years is a good amount of time to see if a strategy is working.

Of course all of my posts are not complete without IMHO.


Andy
Be careful out there, sometimes your the guppie, and sometimes your the shark.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.